POWER POINT

Combative commerce

Lutyens' Delhi boasts many war rooms, starting from the ultra-secret facility maintained by the defence ministry, which is in a state of constant readiness to deal with emergencies on the nation's security. War rooms of political parties spring up during election time, though Amit Shah has now ordered a permanent electoral war room for the BJP, until the party's dream of simultaneous elections for the Lok Sabha and state assemblies comes true.

Illustration: Bhaskaran

As Donald Trump has started flexing his muscles in Washington, and other developed countries to retaliate, New Delhi urgently needs an emergency bunker to fight the trade wars, with Commerce Minister Suresh Prabhu leading from the front. Prabhu was blamed by the US Commerce Department for wrecking a ministerial consensus of World Trade Organization countries. He retorted that it was the stubbornness of Washington against India's food security which derailed the WTO consensus. India had refused the US demand for negotiations on e-commerce, investment facilitation and medium and small enterprises, as the US and the European Union ganged up to create a 60-member group in the WTO to pursue these objectives, leaving India, China and other “difficult” countries out.

The US president, who has taken a vow to eliminate his country's $500 billion trade deficit, has lobbed the first grenade by hiking steel and aluminium import duties. India, which is the ninth largest trading partner of the US, had a bilateral trade surplus of around $23 billion (Rs 1.49 lakh crore), according to the US trade figures. Though it is just a fraction of China's $347 billion trade surplus with the US, steel and aluminium exports from India account for more than $2 billion. A 53 per cent duty would make Indian steel and aluminium products unaffordable. It is a terrible time for the Indian economy to wage a steel war, as several major steel producers have gone belly up with more than Rs 1.5 lakh crore indebted to banks. Lenders are taking big haircuts in selling distressed steel plants.

The commerce department is readying more ammunition to cut down import of goods like automobile components, leather goods and textiles. Trump had complained about the high duties put by India on Harley-Davidson motorcycles, and Prime Minister Narendra Modi had reduced the duty as a response to the personal plea. But, now the mood is darker in the corridors of Udyog Bhavan. The first bomb hurled by India was the increase in customs tariffs on all categories of items, and now an inter-ministerial group is getting ready to pound the drums of war.